MD&A.Oct.31.09.Audit.10.31.10
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HANA MINING LTD. Management’s Discussion and Analysis for the years ended October 31, 2009 and 2008 This Management Discussion and Analysis of the financial results of Hana Mining Ltd.’s (“Hana” or the “Company”) operations for the fourth quarter and year ended October 31, 2009 should be read in conjunction with the audited consolidated financial statements and related notes that follow. This discussion covers the most recently completed year and the subsequent period to February 25, 2010. The audited consolidated financial statements and related notes have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). These documents, along with others published by the Company, are available on SEDAR at www.sedar.com. All dollar amounts are stated in Canadian dollars unless otherwise noted. Company Overview The Company has been exclusively engaged in mineral exploration activity in Botswana since mid-2007, specifically targeting discovery of precious and base metals. The common shares of the Company are listed on both the Toronto Venture Exchange (TSX-V: “HMG”) and the Frankfurt Exchange (“4LH”). The Company was formerly called Golden Patriot Mining Inc., but received TSX approval and began trading under the name Hana Mining Ltd., on March 1, 2007. The Company controls 5 prospecting license blocks in Botswana, covering 2,169 square kilometres in area, situated east of the town of Maun. The Company’s single ...
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HANA MINING LTD. Management’s Discussion and Analysis for the years ended October 31, 2009 and 2008 This Management Discussion and Analysis of the financial results of Hana Mining Ltd.’s (“Hana” or the “Company”) operations for the fourth quarter and year ended October 31, 2009 should be read in conjunction with the audited consolidated financial statements and related notes that follow. This discussion covers the most recently completed year and the subsequent period to February 25, 2010. The audited consolidated financial statements and related notes have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). These documents, along with others published by the Company, are available on SEDAR at www.sedar.com. All dollar amounts are stated in Canadian dollars unless otherwise noted. Company Overview The Company has been exclusively engaged in mineral exploration activity in Botswana since mid-2007, specifically targeting discovery of precious and base metals. The common shares of the Company are listed on both the Toronto Venture Exchange (TSX-V: “HMG”) and the Frankfurt Exchange (“4LH”). The Company was formerly called Golden Patriot Mining Inc., but received TSX approval and began trading under the name Hana Mining Ltd., on March 1, 2007. The Company controls 5 prospecting license blocks in Botswana, covering 2,169 square kilometres in area, situated east of the town of Maun. The Company’s single exploration project, the Ghanzi Copper-Silver Project, is locatedonthislicensieninargeaC.omThpeancieosunatrsyhofavBinotgstwhaenabehsatsinbveeesntmraetnetdcilnim2a0t0e9inbyAtfhriecam,ostrecentFras h eroIuntsotiftu7te1jAunrinsudalSurveyofM h t of the 41 countries surveyed. was rated 18 t ictions surveyed, and 7 t ou At the Company’s Annual General and Special Meeting, held on March 27, 2009, shareholders approved a common share consolidation plan, exchanging three (3) “old” common shares for one (1) “new” common share. The common shares commenced trading on the TSX Venture Exchange on a consolidated basis on April 13, 2009. The Company does not have any projects that generate revenue at this time. The Company’s ability to carry out its business plan rests entirely on its ability to secure equity and other financings. The Company completed six brokered and non-brokered private placements since October 31, 2008, as follows: February, 2009 --- Gross proceeds of $1,536,500, from 10,243,333 units, at $0.15/unit, consisting of one common share and one common share warrant (exercisable at $0.30/common share equivalent), May, 2009 --- Gross proceeds of $3,210,500, from 12,842,000 units, at $0.25/unit, consisting of one common share and one half common share warrant (exercisable at $0.35/common share equivalent), June, 2009 -- Gross proceeds of $500,000, from 2,000,000 units, at $0.25/unit, consisting of one common -share and one half common share warrant (exercisable at $0.35/common share equivalent), October, 2009 Gross proceeds of $150,000, from 416,667 units, at $0.36/unit, consisting of one ---common share and one common share warrant (exercisable at $0.60/common share), December 2009 --- Gross proceeds of $2,500,000, from 4,545,455 units, at $0.55/unit, consisting of one common share and one half common share warrant (exercisable at $1.00/common share equivalent), and December 2009 --- Gross proceeds of $4,000,000, from 5,000,000 shares, at $0.80/share. The proceeds from these financings covered an existing working capital deficit, and will provide continued funding for the Ghanzi Project and other exploration and general expenditures. As at October 31, 2009, the Company had a net working capital of $998,125.
2 - - Principal Properties - The Ghanzi Copper-Silver Project On June 1, 2007, the Company signed a Letter of Intent to acquire a 70% controlling interest in five contiguous prospecting license blocks known as the Ghanzi Property Licenses, containing a highly prospective sediment-hosted copper-silver resource in northwestern Botswana, Africa. In July 2009, this Letter of Intent was superseded by a Share Purchase Agreement with the license owners Stellent (Proprietary) Limited (“Stellent”), a privately held corporation located in Gaborone, Botswana. The Agreement stipulates the terms of the purchase of all issued shares of Stellent by Hana and, effectively, transfer of control over the Ghanzi prospecting licenses to Hana. The Company subsequently purchased and presently owns 70% of the shares of Stellent, has a controlling interest on Stellent’s Board, and retains exclusive rights under the Agreement to purchase the remaining 30% of the Stellent shares, effectively achieving 100% ownership of the Ghanzi prospecting licenses. The transaction has received necessary approvals from the TSX Venture Exchange and the Ministry of Mines of Botswana. The Ghanzi prospecting licenses cover approximately 2,169 square kilometres (216,900 hectares) and include at least six attractive exploration targets, or “Zones”. The property is approximately 150 kilometers in length. Folding of the prospective horizon has resulted in repetition that collectively comprises more than 600 kilometers of strike length. Figure 1. Ghanzi Property Licenses
Various prior license owners drilled 169 diamond and RC holes in the property, 65 of which were used in the NI 43-101 resource estimate. The Company commenced drilling on the property in September 2007, drilled 126 holes and 13,681 metres during five months of calendar 2009, and has completed the following total drill program, through December 2009:
- 3 - Ghanzi Copper-Silver Project Cumulative Drill HMG Drill Program Program Statistics (Total Holes Drilled) Calendar 2007-2009 Number of Drill Holes Diamond Core 98 Reverse Circulation 151 Percussion 115 Total 364 Total Meterage Drilled (metres) 43,480
The Ghanzi property represents an exceptionally large system; this drill hole inventory represents detailed exploration on only 25.7 kilometres or 4.3% of the overall mineralized horizon on the property-based on a 600 kilometre potential. The Company has drilled 23% of the total estimated strike length on the three zones included in the NI 43-101 resource estimate. Numerous other mineralized targets are evident, although they remain less explored at this time. Strike length drilled through December 2009 is as follows:
Strike Length Drilled by Zone Zone Totals (as at December 31st, 2009) Banana Zone 5 Zone 6 Strike Length Drilled/Mineralized (km) 21.2 2.2 2.3 25.7 Total Potential Strike (km) * 60.0 30.0 20.0 110 Percent Strike Drilled (km) 35% 7% 12% 23% Depth of Max Intercept (metres) 200 130 150 n/a *NOTE: Total property strike length estimated at 600 km In June 2009, the Company announced that it had completed its first independent National Instrument (“NI”) 43-101-compliant inferred resource estimate for the Ghanzi Project. The independent engineering firm of GeoLogix Mineral Resource Consultants (Pty.) Ltd. (“Geologix”) of Potchefstroom, South Africa completed the estimate from a total available inventory of 407 drill holes, from Company drilling programs and prior work. GeoLogix applied 225 hole assay results and Datamine software to arrive at an inferred resource on the property of 2.0 billion pounds of copper and 34.91 million ounces of silver from 60.4 million tonnes, grading 1.51% Cu and 17.98 grams per tonne (g/t) Ag, and based on a 0.75% Cu cut-off.
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Resource estimates, based on various cut-off grades for Cu, are as follows : Ghanzi Property NI 43-101 Compliant Inferred Resource Details Copper Cut-Off Resource Copper Contained Silver Contained Grade Tonnes Grade Cu In-Situ Grade Ag In-Situ (MT) (%) (Bn lbs) (g/t) (M oz)
0.30 163.5 0.82 2.97 9.80 51.56 0.40 107.3 1.08 2.55 12.65 43.66 0.50 83.0 1.26 2.31 14.86 39.63 0.60 68.7 1.41 2.14 16.60 36.70 0.75 60.4 1.51 2.01 17.98 34.91 1.00 50.3 1.65 1.82 19.78 31.97 Note: Resource drilled to an avera e vertical de th of 150 metres Through our drilling work we have found the deposit to be fairly predictable in its behavior. Mineralization thickness ranges from 4 to 15 metres and dip is 5 to 60 from horizontal. Mineralization thickness varies by zone, and is impacted by cut-off grade assumptions as well. The Banana Zone averages 5.1 metres thickness at a 0.5% cut-off, Zone 5 - 11.2 metres and Zone 6 - 4.5 metres. Within these resource zones we have found significant areas of mineralization where the grade (at a 0.75% cut-off) is considerably above 1.51% Cu. The North Fold of the Banana Zone shows 1000 km of strike length over 2% Cu (based on 1.5% Cu cut-off) and Zones 5 & 6 results show another 1,200 km at these grades, based on limited drilling. These high grade, +2% Cu pockets tend to be well within open pit depth parameters. They offer the opportunity to locate starter pits which would improve early cash flows and achieve better overall project economics than the average copper grade numbers would otherwise suggest. Early economics are further aided by the fact that the top 30 metres of overburden is a soft Kalahari sand, easily stripped prior to mining. The Banana Zone represents 40.7 million tonnes and 67% of the total NI-43-101 estimated resource. This we believe to be our most prospective potential development area, and it has been the focus of the Company’s drilling and development efforts for all of 2009. The Banana Zone, along with Zone 3, will remain the primary focus for drilling and development activity for 2010.
Figure 2. Banana Zone and Zone 3 Diagram
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Principal Property and Company Updates, for Period August 1, 2009 to February 25, 2010 The Company announced eight sets of drill results during the reporting period, all in the Banana Zone: On September 25, 2009, the Company announced results of 4 RC drill holes in the North Limb (also referred to as “New Discovery’, 25,000 area in figure 2 above), including an intersection of 2.53% Cu and 32.5 g/t Ag over 17 metres, On October 21, 2009, the Company announced completion of 8 RC holes, including results for 7 RC holes in the North Limb (also referred to as “New Discovery”, 25,000 area in figure 2 above), extending strike length by 600 metres and including an intersection of 2.72% Cu and 64.8 g/t Ag over 14 metres, On October 29, 2009, the Company announced completion of 4 RC holes, including results of 3 RC drill holes in the South Limb (60,000 area in figure 2 above), extending strike length by 200 metres and including an intersection of 2.11% Cu and 30.7 g/t Ag over 7 metres, plus results for 1 RC drill hole in the North Limb (also referred to as “New Discovery”, 25,000 area in figure 2 above), extending strike length by 200 metres, On November 11, 2009, the Company announced results for 7 RC holes in the South Limb (60,000 area in figure 2 above), extending strike length by 1000 metres and including an intersection of 2.07% Cu and 30.7 g/t Ag over 9 metres, On November 25, 2009, the Company announced completion of 14 RC holes, including results for 4 RC holes in the South Limb (60,000 area in figure 2 above), extending strike length by 600 metres and including an intersection of 1.1% Cu and 21.2 g/t Ag over 4 metres, plus results for 10 RC drill holes in the Southwest Fold (“SW Fold”) (35,000 area in figure 2 above), extending strike length by 1,000 metres,
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On December 8, 2009, the Company announced completion of 16 RC holes, including results for 5 RC holes in the South LImb (60,000 area in figure 2 above), extending strike length by 600 metres and including an intersection of 1.84% Cu and 23.6 g/t Ag over 17 metres, plus results for 11 RC drill holes in the SW Fold (35,000 area in figure 2 above), extending strike length by 1,000 metres, On January 21, 2010, the Company announced completion of 23 RC holes, including results for 8 RC holes in the South Limb (60,000 area in figure 2 above), extending strike length by 1,000 metres and including an intersection of 1.21% Cu and 16.8 g/t Ag over 15 metres, plus comments on 15 RC drill holes in the SW Fold (35,000 area in figure 2 above), extending strike by 1,000 metres, and On February 16, 2010, the Company announced completion of 15 RC holes, including results for 5 RC holes in the North Limb (10,000 area in figure 2 above), extending strike length by 1,000 metres and including an intersection of 1.76% Cu and 26.5 g/t Ag over 7 metres, plus results for 7 RC holes in the South Limb (60,000 area in figure 2 above), extending strike length by 1,300 metres and including an intersection of 1.15% Cu and 15.1 g/t Ag over 9 metres. On August 10, 2009, the Company announced that it had formed an Advisory Board to counsel the Company Chairman and Board of Directors in matters related to continuing exploration and development of the Ghanzi Project. Three initial appointees to that Board were announced: Mr. Anton Gabriel Esterhuizen, Mr. Chris Barrow, and Mr. George Putnam. These three members of the Advisory Board bring to the team solid and relevant experience in areas of African mineral exploration, business strategy, project development and investor relations. On August 26, 2009, the CEO of Hana Mining wrote a letter (the “Letter”) to shareholders (posted on SEDAR), to discuss certain elements of the Ghanzi Project resource estimate results, and the opportunity the Company sees in defining high grade +2% Cu “pockets” within the Banana Zone that could be ideal locations for starter pits in a development phase. Typical mineralization thickness was reviewed in the Letter as well as overburden characteristics in the Kalahari relevant to surface mining economics. The Letter outlined next steps for drill activity through the remainder of 2009 and 2010, and indicated the Banana Zone, combined with Zone 3 (“Banana/Zone 3”) will be the focus of the Company’s resource development activity during that timeframe. On September 15, 2009, the Company reported positive results from a preliminary groundwater investigation in the area surrounding and including the Ghanzi Project. The desk-top hydrogeology study, produced by Namib Hydrosearch of Windhoek, Namibia, offered the following key findings: There are numerous active water-producing aquifers in the vicinity of the Ghanzi property, and the region exhibits favourable geology to host large aquifers, and Two groundwater sources were identified as likely water sources for the Ghanzi Project, and three specific groundwater resource targets have been established within those known aquifers for more specific exploration. On November 6, 2009, the Company reported that at the Company’s Special Meeting of Shareholders (held November 2, 2009) its Shareholders approved and ratified a Shareholder Rights Plan (the “Plan”), which had previously been announced in May 2009. The Plan will provide HMG’s Board and shareholders more time to fully consider any unsolicited takeover bid, and also allow the Board adequate time to review and pursue alternatives that will maximize shareholder value, if appropriate. On January 21, 2010, the Company announced a spin-out transaction whereby the assets of Hana Mining Ltd. will be separated into two companies, Hana Mining Ltd. and New Hana Copper Mining Ltd. (“New Hana”). The Company presently owns 5 prospecting licenses (2169 sq km) known as the Ghanzi Property Licenses, and 11 prospecting licenses (10,654 sq km) known as the Kuke Property Licenses. The proposal provides for the transfer of the Kuke Property Licenses from Hana Mining Ltd. to New Hana Copper Mining Ltd. There has been no exploration work conducted to date on the Kuke Property Licenses. Hana Mining Ltd. will retain ownership of all other existing assets, including the Ghanzi Copper-Silver Project in Botswana. The Company plans to determine a date of record for the transaction, after receipt of all required regulatory and shareholder approvals. As of that effective date, shareholders of record of Hana Mining Ltd. will receive one “New Hana” common share for every ten shares of Hana Mining Ltd. owned. It is anticipated that New Hana will subsequently seek a TSX Venture Exchange listing. The Company believes this proposed reorganization will allow accelerated funding and development of the Kuke Property Licenses, and minimize dilution to existing shareholders in the more advanced
- 7 - Ghanzi Copper-Silver Project. It is anticipated that a Special General Meeting of the shareholders of the Company to approve the spin-out will be held sometime in April of 2010. Shareholders will receive an Information Circular prior to that meeting, setting out further details of the proposed transaction. Several other press releases were issued by the Company during the period, including: October 1, 2009 --- Announcement of appointment of James A. Sullivan as President and COO of HMG, formerly with Kinross Gold Corporation, October 1, 2009 --- Announcement of granting of 750,000 options to Officers, Directors and consultants of the Company, October 14, 2009 --- Announcement of appointment of Marek Kreczmer to serve as Chairman of the Board of HMG, and James A. Sullivan to serve as HMG Board member, October 20, 2009 --- Announcement of completion of purchase of 70% of Stellent (Proprietary) Limited shares, according to terms set out in the Share Purchase Agreement announced in July 2009, and November 3, 2009 --- Peter Wilson, resigned from his position on the board of directors. January 5, 2010 --- Announcement of appointment of Fred Stahlbush as VP Engineering of HMG, formerly with Kinross Gold Corporation. Qualified Person Joe Arengi, Vice President-Exploration, is the qualified person under National Instrument 43-101 who has reviewed the technical information contained in this report. Share Purchase Agreement between Hana Mining and Stellent On July 14, 2009, the Company entered into a Share Purchase Agreement (the “Agreement”) with the shareholders of Stellent (Proprietary) Limited ("Stellent"), which stipulates the terms of the purchase of all the issued shares of Stellent by the Company and, effectively, transfer of control over the five prospecting licenses comprising the Ghanzi Copper Project. In addition to the acquisition and purchase of an initial 70% share interest in Stellent, the Agreement also grants to the Company the exclusive right to purchase the remaining 30% share interest in Stellent, upon certain terms and conditions. The Agreement was approved by the TSX Venture Exchange on August 18, 2009 and supersedes the previous Letter of Intent made between Stellent, the shareholders of Stellent and the Company. The transfer of Stellent shares to the Company also required approval by the Ministry of Mines of Botswana, such approval was received on September 3, 2009. The consideration payable by the Company for the purchase of the share interests in Stellent is as follows: Purchase of initial 70% share interest (completed on October 20, 2009) Cash payment - US$200,000 (paid); Common stock issuance - 166,666 common shares, subject to a four (4) month hold period; and Warrant issuance - 666,666 share purchase warrants, each warrant entitling the purchase of one (1) additional common share for a period of 24 months, at a price of $0.32 per share. The Company has appointed three (3) members to the Board of Directors of Stellent with the Vendors appointing one (1) director.
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Purchase of additional 20% share interest Cash payment - US$9,000,000 to be paid upon the earlier of the announcement of the completion of a positive, bankable feasibility study, the sale of all of the issued common shares of the Company to a third party or, at the Company’s election. Purchase of final 10% share interest Warrant issuance - 4,000,000 share purchase warrants, each warrant entitling the purchase of one (1) additional common share for a period of 24 months from the date of issuance, at a price of $2.00 per share; such warrants to be issued ten (10) days following the announcement of the completion of a positive, bankable feasibility study. Expenditures related to the Ghanzi Copper Project for the year ended October 31, 2009 consist of: acquisition costs of $391,500 (October 31, 2008 - $467,853), drilling and mobilization of $434,239 (October 31, 2008 -$2,365,801), professional fees of $606,073 (October 31, 2008 - $1,190,465) and mobile equipment of $26,312 (October 31, 2008 - $115,451). Interest income for the year ended October 31, 2009 of $31 (October 31, 2008 -$28,855) has been applied to reduce deferred exploration expenditures. Name Change The Company applied to the applicable government agencies and to the TSX Venture Exchange (“TSXV”) to change its name from Golden Patriot Mining Inc.to Hana Mining Ltd. The TSXV approved the change and the Company started trading under the symbol “HMG” on March 1, 2007. Corporate Update During the year, the following changes were made to the board of directors: James A. Sullivan was appointed to the Board effective October 14, 2009. Mr. Sullivan is also President of the Company. Peter Wilson resigned from the Board effective November 3, 2009. Selected Annual Information YEARS ENDED OCTOBER 31 In Canadian dollars 2009 2008 2007 Net loss 1,375,622 1,717,146 1,029,946 Loss per share 0.05 0.14 0.04 Total assets 11,105,848 5,422,576 3,464,077 Total deferred exploration and 9,234,6 mineral property cost 67 5,213,477 1,102,762 Total liabilities 647,937 1,001,034 484,953 In 2009, the Company increased its overall administrative expenses by $1,156,231. The Company’s total assets are mostly comprised of cash and deferred exploration costs and a smaller portion of receivables and fixed assets. At October 31, 2009, the cash balance was $1,569,826 compared to $34,671 in 2008 and the deferred exploration costs increased by $4,021,190 to $9,234,667 which all related to work carried out and option payments for the Ghanzi property in Botswana.
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Results of Operations For the year ended October 31, 2009, the net loss after tax was $1,375,622 compared to a loss of $1,717,146 a year earlier. Major contributors to the $341,524 decrease are: higher professional and consulting fees of $361,434 and higher management fees of $118,794 which were offset by a recovery of future income taxes of $1,370,670 related to the purchase of shares in Stellent and lower office and administration costs by $(79,537) due to lower rent. Non-cash increases in directors and employee stock based compensation of $101,166 and $556,810 also contributed to the higher loss. Interest income is capitalized (included in deferred exploration costs) to comply with Accounting Guideline 11. For the year ended October 31, 2009, the total interest income was $31 compared to $28,855 in 2008. Interest income is directly related to the cash balance and varies with the average balance held. Summary of Quarterly Results October July April January October July April January Q4/2009 Q3/2009 Q2/2009 Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008 Net loss (profit) (759,826) 1,262,749 493,394 379,305 349,437 688,089 459,671 219,949 Loss(profit) per sha ( r 1 e ) (0.02) 0.04 0.02 0.01 0.01 0.02 0.01 0.01 (1) Loss per share remains the same on a fully diluted basis Liquidity and Capital Resources At October 31, 2009, the Company had a cash balance of $1,569,826 and working capital of $998,125 The Company completed three non-brokered and one brokered private placement during the fiscal year for gross proceeds of $5,397,000. A further $6,500,000 in gross proceeds was raised in two non-brokered private placements closed subsequent to year end in December, 2009. The ability of the Company to successfully acquire mineral projects or recover amounts expended on mineral properties is conditional on its ability to secure financing when required. The Company proposes to meet additional financing requirements through equity financing. In light of the continually changing financial markets, there is no assurance that new funding will be available at the times required or desired by the Company. In the year ended October 31, 2009, the Company’s cash position increased from $1,535,155 to $1,569,826. Private placements raised $4,654,133 net of issue costs while exercise of warrants raised a further $323,198. This funding was offset by exploration expenditures of $1,070,827 for the Ghanzi property in Botswana, administrative expenditures of $1,694,936, net repayment of accounts payable of $272,870, and purchase of fixed assets of $152,931. The Company has no long-term contractual obligations. The Company can terminate all option or joint venture agreements requiring minimum exploration expenses at any time without further financial obligations. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements. Transactions with Related Parties During the year ended October 31, 2009, the Company paid or accrued management and consulting fees of $644,609 (2008 - $439,633) to officers and directors of the Company. Included in accounts payable and accrued liabilities as at October 31, 2009 is $137,500 (2008 - $99,719) owing to these individuals for fees and expense reimbursements.
- 10 - A balance is due to NWT Uranium Corp. ("NWT"), formerly Northwestern Mineral Ventures Inc. NWT and Hana are related parties since both companies previously had the same Chief Executive Officer and Chief Financial Officer. The amount owed as of October 31, 2009 was $135,898 (2008 - $112,341). The outstanding balance was repaid in full on December 7, 2009. A loan advanced by an officer who is also a director was repaid in full on June 25, 2009 (2008 - $73,400). These transactions were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the related parties. The amounts due to related parties are unsecured, non-interest bearing and repayable on demand. Outstanding Share Data On March 27, 2009, the Company consolidated its existing 73,380,897 common shares, exchanging 3 (old) common shares for 1 (new) common share resulting in 24,460,269 new common shares outstanding. All common shares and per share amounts have been restated to give retroactive effect to the 3:1 share consolidation that took effect on March 27, 2009. A further 15,258,667 common shares were issued pursuant to the brokered and non-brokered private placements completed in May, June and October, 2009 while 1,033,354 common shares were issued through the exercise of warrants. A further 166,667 common shares were issued pursuant to the Share Purchase Agreement with Stellent, 385,000 common shares were issued as finders fees related to the brokered private placement and 104,170 common shares were issued pursuant to the shares for debt program undertaken by the Company in February, 2009. As at February 25, 2010, the Company had issued and outstanding 59,131,445 common shares or 77,399,773 common shares on a fully diluted basis (October 2008 – 13,665,299 and 19,122,328 respectively). Included in the fully diluted number are 14,424,165 warrants and 3,844,163 stock options. Proposed Transactions The Company continues to evaluate quality exploration projects and financing opportunities. There are no transactions currently pending. Subsequent Events Shareholders’ Rights Plan: On November 2, 2009, Shareholders approved and ratified a Shareholder Rights Plan. The Plan will provide the Company’s Board and shareholders more time to fully consider any unsolicited takeover bid, and also allow the Board adequate time to review and pursue alternatives that will maximize shareholder value, if appropriate. Private Placements: On December 1, 2009, the Company closed a non-brokered private placement consisting of 4,545,455 units at a price of $0.55 per unit for gross proceeds of $2,500,000. Each unit consisted of one common share and one-half of one common non-transferrable share purchase warrant. Each warrant will provide the holder thereof with the right to acquire one additional common share in the capital stock of the company at a price of $1 per share on or before June 1, 2011. All securities issued and issuable under the non-brokered private placement are subject to a hold period expiring on April 1, 2010. On December 23, 2009, the Company closed a non-brokered private placement for proceeds of $4,000,000. The private placement consisted of 5,000,000 common shares for a purchase price of $0.80 per share. All securities issued under the non-brokered private placement are subject to a hold period expiring on April 22, 2010.
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Grant of Stock Options: On January 5, 2010, the Company issued 250,000 stock options with an exercise price of $1.23 per share to an employee of the Company. The options will vest in four tranches over one year and expire on January 5, 2015. Exercise of Warrants and Stock Options: Subsequent to year-end, 150,000 stock options were exercised at an exercise price of $0.38 per share and 16,667 stock options were exercised at an exercise price of $0.90 per share. Subsequent to year-end, 5,494,999 warrants were exercised at an exercise price of $0.30 per share; 200,001 warrants were exercised at an exercise price of $0.51 per share; and 2,306,737 warrants were exercised at an exercise price of $0.35 per share. A total of 394,460 Agent’s Options were also exercised subsequent to year end at an exercise price of $0.285 per share. Spin-Out of Kuke Property to New Hana: On January 21, 2010, the Company announced a spin-out transaction whereby the assets of Hana Mining Ltd. will be separated into two companies, Hana Mining Ltd. and New Hana Copper Mining Ltd. (“New Hana”). The Company presently owns 5 prospecting licenses (2169 sq km) known as the Ghanzi Property Licenses, and 11 prospecting licenses (10,654 sq km) known as the Kuke Property Licenses. The proposal provides for the transfer of the Kuke Property Licenses from Hana Mining Ltd. to New Hana Copper Mining Ltd. Repayment of Outstanding Balance to NWT Uranium Inc: On December 7, 2009, the Company paid $135,898 related to the amount outstanding to NWT Uranium Inc. Change in Accounting Policies Business Combinations, Non-controlling Interest and Consolidated Financial Statements In January 2009, the CICA issued Section 1582, Business Combinations, Section 1601, Consolidated Financial Statements and Section 1602, Non-controlling Interests, which replace Sections 1581, Business Combinations, and Section 1600, Consolidated Financial Statements. Section 1582 establishes standards for the accounting for business combinations that is equivalent to the business combination accounting standard under IFRS. Section 1582 is applicable for the Company’s business combinations with acquisition dates on or after January 1, 2011. Section 1601 together with Section 1602 establishes standards for the preparation of consolidated financial statements. Section 1601 is applicable for the Company’s interim and annual consolidated financial statements for its fiscal year beginning on or after January 1, 2011. Early adoption of these Sections is permitted and all three Sections must be adopted concurrently. The Company adopted the new standards including CICA Handbook Section 1582, Section 1601 and Section 1602 for the year ended October 31, 2009. Goodwill and Intangible Assets The CICA Accounting Standards Board (“AcSB”) issued a new Section 3064, Goodwill and Intangible Assets, to replace current Section 3062, Goodwill and Other Intangible Assets. The new section establishes revised standards for recognizing, measuring, presenting and disclosing goodwill and intangible assets. CICA 3064 is effective for fiscal years beginning on or after October 1, 2008 and was adopted by the Company effective 1 November 2008. The adoption of the new Section did not have any material impact on the consolidated financial statements. Credit Risk and the Fair Value of Financial Assets and Financial Liabilities On January 20, 2009, the Emerging Issues Committee (“EIC”) issued EIC Abstract 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities, which establishes that an entity’s own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivative instruments. EIC 173 should be applied retrospectively without restatement of prior years to all financial assets and liabilities measured at fair value for the year ended October 31, 2009. Mining Exploration Costs On March 27, 2009, the EIC issued EIC Abstract 174, Mining Exploration Costs, which provides guidance on capitalization of exploration costs related to mining properties. It also provides guidance for development and
